Egypt Unrest Was Sparked by Food Inflation

Egypt's problems have been simmering for years, but food inflation has brought it to a boil. Remember: food inflation is behind much of the unrest, not just in Egypt but all over the world. Commodity prices have been rising for months, and many countries have already seen unrest over higher food prices.

In November, overall inflation in Egypt topped 8.58 percent for the year, its highest level in 19 months. But food inflation has been much more pronounced.

Fitch, in downgrading Egypt's outlook to negative today, specifically cited the high food inflation, which it said was running at about 17 percent a year. The main drivers of food inflation are meat and sugar.

Outside of inflation, contagion is the main issue. Egypt has the Suez Canal; Yemen is seeing protests. So what is the new geopolitical risk premium for oil? $10? $20?

One side effect: volume heavier than usual. At 3:00pm ET, volume in the NYSE consolidated tape (all trading in all NYSE stocks) passed 4.3 billion shares. About 5 billion shares or so is normal.